EXHIBIT 10.2
EMPLOYMENT, CONFIDENTIALITY AND NONCOMPETITION AGREEMENT
(ORON XXXXXXX)
This Employment, Confidentiality and Noncompetition Agreement
(this "Agreement") is made and entered into as of this 15 day of December, 1999,
by and between NET.CAPITOL, INC., a Delaware corporation ("Employer"), and ORON
XXXXXXX ("Employee").
In consideration of the mutual promises and covenants
contained in this Agreement, the receipt and legal sufficiency of which
consideration are hereby acknowledged, the parties hereby agree as follows:
1. EMPLOYMENT. Employer shall employ Employee and
Employee shall work for Employer in the employment position described in
EXHIBIT 1 attached, which is by this reference incorporated into and made a
part of this Agreement. In this position, Employee shall perform all assigned
duties, comply with all employment policies, and obey all rules, regulations
and special instructions that now exist or that may in the future be
established by Employer from time to time. Employee shall render such
services and perform such duties at such places or in such areas or
territories as Employer shall direct. Employee warrants that all information
provided by Employee in applying for employment is true and correct.
2. EMPLOYEE PERFORMANCE. Employee accepts employment
with Employer on the terms and conditions provided in this Agreement.
Employee recognizes that Employee owes to Employer duties of loyalty,
fidelity and obedience in all matters pertaining to such employment. Employee
shall serve Employer diligently and faithfully, shall timely perform all
duties to the best of Employee's ability and in compliance with Employer's
reasonable standards of performance, and shall devote Employee's full time
and best efforts to the conduct of Employer's business. Employee may pursue
charitable, civic and political interests so long as such activities are not
inconsistent with this Agreement. Employee must receive prior approval of
Netivation's Executive Committee prior to accepting an advisory role (as a
board member or otherwise) with another company.
3. COMPENSATION. In consideration for the services of
Employee rendered to Employer pursuant to the terms of this Agreement, and
subject to the full performance of Employee's obligations hereunder, Employer
shall pay Employee according to the provisions of Employer's compensation
plan described in EXHIBIT 1. Employee shall receive no compensation or
benefits, including but not limited to paid holidays, paid vacation and paid
health insurance, that are not set forth in EXHIBIT 1. Employee understands
that the compensation plan is subject to modification by Employer at any
time; provided, however, Employer shall not decrease Employee's base salary
during the term of employment under this Agreement except for any decrease
that is consistent with any across-the-board adjustment by Employer of its
executive officers' salaries.
4. TERM OF EMPLOYMENT. Employee's term of employment
under this Agreement shall commence on December 15,1999, and shall continue
until December 14, 2002, unless prior to that date (a) Employer, for "Cause"
(as defined below), terminates Employer's employment of Employee, or (b)
Employer and Employee mutually agree to the termination of Employee's
employment, in a writing signed by both of them in accordance with paragraph
11(G) of this Agreement. During the term of this Agreement, Employer may
terminate the employment of Employee for "Cause" by giving Employee specific
written notice of the cause for such termination. For the purposes of this
Agreement, "Cause" shall include but not be limited to (i) Employee's
disregard of lawful instructions of Employer that are consistent with
Employee's position and duties set forth herein; (ii) Employee's failure to
perform Employee's duties in compliance with Employer's reasonable standards
of performance; (iii) Employee's willful actions which do or are likely to
result in material damage or embarrassment to Employer, Employer's
reputation, or Employer's other legitimate business interests; (iv)
Employee's abuse or illegal use of alcohol or other drugs or controlled
substances; (v) Employee's material breach of any of the terms or conditions
of this Agreement; (vi) the conviction of Employee of a felony; or (vii)
Employee's theft, embezzlement or misappropriation of funds from Employer. In
addition, Employee's resignation shall be deemed a termination for Cause.
Upon Employer giving Employee notice of termination pursuant to Subsection
(i), (ii), (iii), (iv), or (v) above, Employee shall have thirty (30) days to
cure the deficiency. If Employee does not cure the deficiency within
said thirty (30) day period, then Employee's termination shall take effect at
the end of such period. A termination pursuant to Subsection (vi), (vii), or
for any other Cause shall take effect immediately upon the giving of notice.
5. CONFIDENTIAL INFORMATION.
A. DEFINITION OF CONFIDENTIAL INFORMATION.
Employer is in the business of designing, creating, perfecting, marketing,
distributing, selling and servicing computer software and Internet-based
products and services, and Employer has built up an established and extensive
trade and reputation in the industry. Employer has developed and continues to
develop commercially valuable technical and non-technical information
("Confidential Information") that is proprietary and confidential and/or
constitutes Employer's "trade secrets" within the meaning of the Idaho Trade
Secrets Act, Idaho Code Sections 48-801B48-807. Such Confidential
Information, which is vital to the success of Employer's business, includes,
but is not necessarily limited to: programs, computer programs, system
documentation, data compilations, manuals, methods, techniques, processes,
patented and/or unpatented technology, research, know-how, development,
designs, devices, inventions, the identities of customers, prospective
customers, suppliers and prospective suppliers, contracts with suppliers and
customers, sales proposals, methods of sales, marketing research and data,
pricing policies, cost information, financial information, business plans,
specialized requests of Employer's customers, and other materials and
documents developed by Employer. Confidential Information also includes
special hardware, product hardware, related software and related
documentation, either owned by Employer or in Employer's possession under an
agreement of nondisclosure. Through Employee's employment, Employee may
become acquainted with or contribute to Employer's Confidential Information
through inventions, discoveries, improvements, software development, and/or
in other ways.
B. EMPLOYEE ACCESS TO CONFIDENTIAL
INFORMATION. Employee shall: (a) access only such Confidential Information as
is reasonably necessary to perform Employee's job functions; and (b) allow
access to Confidential Information under Employee's control to only those of
Employee's co-employees whose job functions for Employer reasonably
necessitate access to such Confidential Information.
C. NONDISCLOSURE OF CONFIDENTIAL INFORMATION.
Employee shall not, at any time, either during or subsequent to employment,
directly or indirectly, appropriate, disclose or divulge any Confidential
Information to any person not then employed by Employer, unless authorized or
directed to do so by Employer. If Employer authorizes or directs Employee to
disclose Confidential Information to any third party, Employee must ensure
that a signed confidentiality agreement for the benefit of Employer is or has
been obtained from the third party to whom Confidential Information is being
disclosed and that all Confidential Information so disclosed is clearly
marked "Confidential."
D. RETURN OF CONFIDENTIAL AND OTHER
INFORMATION. All Confidential Information provided to Employee, and all
documents and things prepared by Employee in the course of Employee's
employment, including but not necessarily limited to correspondence,
drawings, blueprints, manuals, letters, notes, lists, notebooks, reports,
flow-charts, computer programs, proposals, DayTimers, planners, calendars,
schedules, discs, data tapes, financial plans and information, business
plans, and other documents and records, whether in hard copy, magnetic media
or otherwise, and any and all copies thereof, are the exclusive property of
Employer and shall be returned immediately to Employer upon termination of
employment or upon Employer's request at any time.
E. OWNERSHIP OF CONFIDENTIAL INFORMATION.
Employee hereby grants to Employer, and Employer hereby accepts, the entire
right, title, and interest of Employee in and to any of the Confidential
Information created or developed by Employee, or that may be created or
developed by Employee during the term of Employee's employment by Employer
(whether created or developed within or outside the course and scope of
Employee's employment by Employer), including, but not limited to, all
patents, copyrights, trade secrets, and other proprietary rights in or based
on the Confidential Information. If the Confidential Information or any
portion thereof is copyrightable, it shall be deemed to be a "work made for
hire," as such term is defined in the copyright laws of the United States.
Employee shall cooperate with Employer or its designees and execute
assignments, oaths, declarations, and other documents prepared by Employer,
to effect the terms of this Section 5E or to perfect or enforce any
proprietary rights resulting from or related to this Agreement. Such
cooperation and execution shall be at no additional compensation to Employee;
provided, however, Employer shall reimburse Employee for reasonable
out-of-pocket expenses incurred at the specific request of Employer.
6. NONCOMPETITION OBLIGATIONS. During the term of
Employee's employment with Employer, and for a period of twelve (12) months
immediately following termination of such employment for any reason, Employee
will not, directly or indirectly, at any place in the world, engage or become
interested (as owner, stockholder, partner, director, officer, member,
creditor, consultant, or employee) in any business in competition with any
portion of the business conducted by Employer at any time during Employee's
employment with Employer. Employee acknowledges that Employer is doing
business throughout the world, that Employee is reasonably expected to have
contact with Employer's customers throughout the world during the term of
Employee's employment with Employer, and that the worldwide geographic scope
of this covenant is reasonably necessary to protect Employer's legitimate
business interests.
7. CUSTOMER NON-SOLICITATION. Employee will not,
during the term of employment with Employer and for twelve (12) months
following termination of such employment for any reason, solicit, divert,
take away, or attempt to solicit, divert or take away, any of Employer's
customers or the business or patronage of any such customers, either for
him/herself or on behalf of any other person, partnership, corporation or
other entity, unless agreed to in writing by Employee and Employer.
8. CO-EMPLOYEE NON-SOLICITATION. Employee will not,
during the term of employment with Employer and for twelve (12) months
following termination of such employment for any reason, solicit, recruit or
hire any other employee of Employer, either for him/herself or on behalf of
any other person, partnership, corporation or other entity, unless agreed to
in writing by Employee and Employer.
9. ENFORCEMENT.
A. REASONABLENESS OF RESTRICTIONS. Employee
acknowledges that compliance with this Agreement is reasonable and necessary
to protect Employer's legitimate business interests, including but not
limited to Employer's goodwill.
B. IRREPARABLE HARM. Employee acknowledges
that a breach of Employee's obligations under this Agreement will result in
great, irreparable and continuing harm and damage to Employer for which there
is no adequate remedy at law.
C. INJUNCTIVE RELIEF. Employee agrees that in
the event Employee breaches this Agreement, Employer shall be entitled to
seek, from any court of competent jurisdiction, preliminary and permanent
injunctive relief to enforce the terms of this Agreement, in addition to any
and all monetary damages allowed by law, against Employee.
D. EXTENSION OF COVENANTS. In the event
Employee violates any one or more of the covenants contained in sections 6
through 8 of this Agreement, Employee agrees that the running of the term of
each covenant so violated shall be tolled during the period(s) of any such
violation and the pendency of any litigation arising out of any such
violation.
E. JUDICIAL MODIFICATION. The parties have
attempted to limit Employee's right to compete only to the extent necessary
to protect Employer from unfair business practices and/or unfair competition.
The parties recognize, however, that reasonable people may differ in making
such a determination. Consequently, the parties hereby agree that, if the
scope or enforceability of the restrictive covenant is in any way disputed at
any time, a court or other trier of fact may modify and enforce the covenant
to the extent that it believes to be reasonable under the circumstances
existing at that time.
F. ATTORNEY FEES. In the event it becomes
necessary for either party to this Agreement to institute a suit at law or in
equity for the purposes of enforcing any of the provisions of this Agreement,
the prevailing party shall be entitled to recover said party's reasonable
attorney's fees, plus court costs and expenses, from the nonprevailing party.
G. WITHHOLDING FROM FINAL PAYCHECK. Employee
expressly authorizes Employer to withhold and deduct from Employee's final
wages any amounts owed by Employee to Employer at the time of the termination
of employment, including but not limited to, any draw deficiencies,
reimbursement for unearned commissions, and the value of unreturned or
damaged Employer property. Employee further expressly agrees to repay to
Employer any additional sums owed by Employee to Employer (above that which
can be withheld) immediately upon termination of Employee's employment.
Employee agrees that this paragraph waives and supersedes any and all
federal, state and local laws to the contrary, to the full extent allowed by
law.
10. INDEMNITY. Employee warrants and represents that
Employee has not violated, is not violating, and will not violate any of the
terms or conditions of any prior employment agreement, restrictive covenant,
or other agreement entered into by Employee while in the employment of any
other employer; that Employee has not given and will not give to Employer at
any time any customer list, trade secret, or any other item of confidential
information, obtained or received while in the employment of any other
employer; that Employee's employment with Employer is not restricted or
limited in any way by any such employment agreement or restrictive covenant
or by operation of any state, federal or local regulation, statute or other
law of any kind, name or nature, including but not limited to trade secret
laws and immigration laws; and that Employee is in all respects duly
qualified and eligible to work for Employer. In the event any legal or
administrative action is commenced against Employee, Employer or both,
arising out of Employee's former employment by another employer or Employee's
illegal action or violation of one or more of the warranties or
representations set forth in this section, Employee agrees to indemnify
Employer for all damages, costs and expenses, including reasonable attorney
fees, which Employer may have to pay in connection with such legal or
administrative action.
11. MISCELLANEOUS.
A. SURVIVAL. Employee understands that this
Agreement shall be effective as of the date first written above and that the
terms of this Agreement shall remain in full force and effect not only during
the continuation of Employee's employment, but also after the termination of
employment for any reason by Employer or Employee.
B. WAIVER. Failure of Employer to exercise or
otherwise act with respect to any of its rights under this Agreement shall
not be construed as a waiver of any breach, nor prevent Employer from
thereafter enforcing strict compliance with any and all terms of this
Agreement.
C. SEVERABILITY. If any part of this Agreement
shall be adjudicated to be invalid or unenforceable, as to duration,
territory or otherwise, then such part shall be deemed deleted from this
Agreement or amended, as the case may be, in order to render the remainder of
this Agreement valid and enforceable.
D. AGREEMENT BINDING. This Agreement shall be
binding upon and inure to the benefit of Employer, Employer's successors and
assigns, Employee and Employee's heirs, executors, administrators and legal
representatives.
E. GOVERNING LAW. This Agreement is made and
entered into in the State of Idaho, where Employer has its principal place of
business, and concerns employment situated in said state. This Agreement
shall be interpreted and construed in accordance with the laws of the State
of Idaho.
F. TITLES AND CAPTIONS. All section and
paragraph titles and captions contained in this Agreement are for convenience
only and shall not be deemed part of the context nor affect the construction
or interpretation of this Agreement.
G. ENTIRE AGREEMENT. This Agreement contains
all the understandings and agreements between the parties concerning matters
set forth in this Agreement. The terms of this Agreement supersede any and
all prior statements, representations and agreements by or between Employer
and Employee, or either of them, concerning the matters set forth in this
Agreement. Employee acknowledges that no person who is an agent or employee
of Employer may orally or by conduct modify, delete, vary, or contradict the
terms or
conditions of this Agreement or this paragraph. This Agreement may be
modified only by a written agreement signed by both parties.
EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS READ AND UNDERSTANDS
THE ENTIRE CONTENTS OF THIS AGREEMENT AND THAT EMPLOYEE HAS RECEIVED A COPY OF
THIS AGREEMENT.
EMPLOYER:
NET.CAPITOL, INC.
By ___________________________________
Xxxxxxx X. Xxxxxx, Director
EMPLOYEE:
______________________________________
Oron Xxxxxxx
EXHIBIT 1 TO EMPLOYMENT, CONFIDENTIALITY
AND NONCOMPETITION AGREEMENT
DATED DECEMBER 15, 1999
Employee's Job Title: CEO, President of Net.Capitol, Inc.
Base Salary: $125,000 annually for the term of this Agreement, payable at the same
frequency as Employer's other employees.
Stock Options: In January 2000, Employer shall cause its parent, Xxxxxxxxxx.xxx, Inc.
("Netivation") to grant to Employee an option to acquire up to 40,000 shares
of Netivation's common stock pursuant to and subject to the terms of
Netivation's 1999 Equity Incentive Plan. The options shall be exercisable at
the fair market value of Netivation's common stock price as listed on the
Nasdaq National Market at the end of trading on the Closing Date of the Merger
(capitalized terms not otherwise defined in this Employment Agreement shall
have the meaning ascribed to them in the Merger Agreement to which Employer is
a party dated November 17, 1999). The options shall be subject to lock-ups
and restrictions required by the IPO underwriter. The options shall vest as
follows:
CONTINUOUS EMPLOYMENT
FROM SIGNING AGREEMENT PORTION EXERCISABLE
---------------------- -------------------
January 31, 2000 1/3
December 31, 2000 1/3
December 31, 2001 1/3
Additional Stock Options: In January 2000, Employer shall cause Netivation
to grant to Employee additional options to acquire shares of Netivation's
common stock pursuant to and subject to the terms of Netivation's 1999
Equity Incentive Plan. The options shall be exercisable at the fair market
value of Netivation's common stock price as listed on the Nasdaq National
Market at the end of trading on the Closing Date of the Merger. The options
shall be subject to lock-ups and restrictions required by the IPO
underwriter. The options shall vest as follows:
AMOUNT 100% VESTMENT DATE
------ ------------------
20,000 regular incentive shares 12/31/03**
10,000 bonus incentive shares 12/31/03**
** Vesting accelerates to 01/31/00 as follows:
1999 GROSS REVENUE REGULAR OPTIONS BONUS OPTIONS
------------------ --------------- -------------
greater than $1,500,000 100% 100%
greater than $1,250,000 100% 50%
greater than $1,000,000 100% 0%
greater than $500,000 50% 0%
Employee acknowledges that the grant of options to Employee is not an
employment agreement and does not create any obligation to continue
Employee's employment beyond the terms stated in this Employment,
Confidentiality and Noncompetition Agreement.
Benefits: Employee shall participate in employee benefit programs, such as paid
vacation,life insurance, medical, disability and ther similar plans
that now or during the term of this Agreement are made generally
available to executives of Employer of comparable position.
Expenses: Employer will reimburse Employee for reasonable expenses for entertainment,
travel, phone, day-to-day expenses and similar items that he incurs on behalf
of Employer.
EMPLOYER:
NET.CAPITOL, INC.
By __________________________________
Xxxxxxx X. Xxxxxx, Director
EMPLOYEE:
_____________________________________
Oron Xxxxxxx
